By Joseph Kahn

If Karl Marx were alive today, Guangdong might be his Manchester. Like England's 19th-century industrial center, 21st-century Guangdong, China's southern commercial hub, is the world's factory. And like Manchester, Guangdong is also creating a stark divide between labor and capital, a split that once became the ideological basis for revolutions around the world, including China's own. Tens of millions of industrial workers are struggling toward basic rights, to earn enough to send their children to school, for laws that would allow them to bargain collectively. And they are losing.

"If Marx could see Guangdong today he would die of anger," says Dai Jianzhong, a labor relations expert at the Beijing Academy of Social Science. "From that perspective, China is speeding in reverse."

Even more than England or the United States in their industrializing heydays, China's growth relies on cheap labor. The foreign-invested factories here, including production centers for most multinational companies, depend on a flexible work force that actually grows cheaper by the year.

Guangdong has grown by more than 10 percent annually for the past decade. But its factory workers, mostly migrants from the interior, earn no more today than they did in 1993, several Chinese studies have found. The average wage of $50 to $70 a month also buys less today than it did in the early 1990's, meaning workers are losing ground even as China enjoys one of the longest and most robust expansions in modern history.

This is partly a paradox of globalization. China has attracted more foreign investment by far than any other developing country, nearly $500 billion since it began internationalizing its economy. But it continues to draw capital essentially because it is willing to rent workers for falling returns. The free-market economic policies have not left China worse off on the whole. They have lifted it out of the ranks of the world's poorest countries, created a nascent middle class of service industry workers in the big cities, and made China the largest Asian exporter to the United States.

But China is living through a gilded age of inequality, whose benefits are not trickling down to the 700 million or 800 million rural residents who live off the land or flock to the cities for factory or construction jobs. The situation has given rise to a new group of Marxist critics who call themselves China's new left. Wang Hui, a new left thinker, published a book late last year, titled "China's New Order," attacking China's leaders for using "state interference and even violence" to enforce its vision of international capitalism. He says the leaders have colonized their own citizens.

Not surprisingly, Chinese officials do not put it that way, and few here believe that China needs another Marxist revolution. Nor would Communist Party officials say that democracy, rather than an authoritarian political system, is needed to bring greater social justice to China. Still, Communist leaders increasingly seem convinced that neither economic growth nor China's tattered legacy of socialist laws will prevent social unrest, even violent upheaval of the kind that helped bring the party to power in 1949.

President Hu Jintao and Wen Jiabao, the prime minister, have vowed to raise peasant incomes and stop the most egregious abuse of workers. Executives of multinational corporations say they have a harder time getting appointments with Wen and Hu than they did in the past. "Inequality these days is too stark to be ignored," says Kang Xiaoguang, a leading political analyst in Beijing. "The party has begun to recognize that its legitimacy cannot come from economic reform as such. It needs to stress fairness and justice." Doubts remain, though, whether Hu and Wen have the power, or desire, to do much about it. The capitalist road China has traveled since the latter years of Deng Xiaoping's rule in the early 1990's is Darwinian by the historical standards of the United States, England - even East Asia.

The British working class first got the right to vote in the 1880's, amid England's industrialization. American industrial unions trace their roots to the early 20th century, when hazardous work conditions and sweatshop wages were a dominant feature of urban life. Almost all of China's neighbors allowed more leeway for union activity than China does, though they were also notorious in the 1970's and 1980's for the sort of abuses common in China today.

But the leaders have single-mindedly embraced growth to finance the enormous government bureaucracy, absorb huge unemployment, and help state-run banks avoid collapse. Worker rights and environmental protection are seen as threats to investment. "The government views many social problems as something the next generation can solve, when China is wealthier," says Dai, the labor expert. "The problem is that the longer we wait, the greater the burden."

In addition, many lower-level officials participate in exploiting the workers. State-financed construction projects often fail to pay the workers they hire. The reason, it is assumed, is that bureaucrats and favored businessmen pocket the money. Many coal mines do not install safety equipment, and the death toll in accidents has been well in excess of 5,000 annually. (China in 2003 produced about 40 percent more coal than the United States but had at least 130 times more mining fatalities.)

The foreign-financed export sector is less dangerous. But the factories that produce the world's goods operate on marathon 12-hour shifts, rarely pausing on Sundays. Workers live in crowded dormitories with communal bathrooms that lack hot water in winter or fans in summer. Guangdong legally requires a 40-hour workweek, a minimum wage, before overtime, of about $72 a month, as well as medical insurance and pension plans.

But factory managers said in interviews over the past year that the only people who care about these standards are managers for foreign companies. And these people, factory bosses say, are easily deceived.
When workers demand their rights, they are slapped down. The state-controlled national union requires that all factories with 100 employees or more open a branch. But in most cases this is never done. Independent unions are treated as subversive.

Despite sporadic attention to these concerns, most intellectuals and government officials long ago embraced the market, and the invisible hand of supply and demand, as the solution to China's sweatshop problem.
In a recent essay in Southern Breeze magazine, Xue Zhaofeng, an economist, criticized foreigners for trying to impose "one size fits all" labor standards on China. But after 25 years of economic reform, China probably needs no more convincing about what markets can do. The question it now faces is what they cannot do.

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